HHS Wildly Overstates the Problem of Pre-Existing Conditions — and Ignores Its Cause
On the eve of a House vote to repeal ObamaCare, the Department of Health and Human Services has released a report claiming that if repeal succeeds, “1 in 2 non-elderly Americans could be denied coverage or charged more due to a pre-existing condition.” A few problems with that claim:
- An HHS survey found that in 2001, only 1 percent of Americans had ever been denied health insurance.
- Economists Mark Pauly and Len Nichols write, “the fraction of nonelderly uninsured persons…who would be rated as actuarially uninsurable is generally estimated to be very small, less than 1 percent of the population.”
- RAND health economist Susan Marquis and her colleagues find that in markets that do not impose ObamaCare-style government price controls on health insurance, such as California’s individual market, ‘‘a large number of people with health problems do obtain coverage…Our analysis confirms earlier studies’ findings that there is considerable risk pooling in the individual market and that high risks are not charged premiums that fully reflect their higher risk.’’
- It is true that insurers charge higher premiums to many people with pre-existing conditions — and it is crucial that they have the freedom to do so. Risk-based premiums create virtuous incentives for people to buy insurance while they are healthy and to be cost-conscious consumers. They also encourage insurers to develop innovative products that protect against the risk of higher premiums. The real problem here is that the government has created an employment-based health insurance system that denies consumers the protections that unregulated markets already provide, as well as additional protections that insurers would develop absent this government intervention.
- ObamaCare’s health-insurance price controls will encourage insurers to deny care to the very sick people those price controls are intended to help.
- The Obama administration projected that 375,000 people would sign up for ObamaCare’s “Pre-Existing Condition Insurance Plans” by the end of last year. But only 8,000 people enrolled in such plans by December 2010, suggesting the demand isn’t nearly as great as the administration claimed.
AP: Obama Misleads Voters about ObamaCare’s Effects on Premiums
Buyers, beware: President Barack Obama says his health care overhaul will lower premiums by double digits, but check the fine print…
The [Congressional Budget Office] concluded that premiums for people buying their own coverage would go up by an average of 10 percent to 13 percent, compared with the levels they’d reach without the legislation…
“People are likely to not buy the same low-value policies they are buying now,” said health economist Len Nichols of George Mason University. “If they did buy the same value plans … the premium would be lower than it is now. This makes the White House statement true. But is it possibly misleading for some people? Sure.”
Nichols’ comments are also misleading — which makes the president’s statement not just misleading but untrue.
Under ObamaCare, people would not have the option to buy the same low-cost plans they do today. That’s the whole problem: under an individual mandate, everybody must purchase the minimum level of coverage specified by the government. That minimum benefits package would be more expensive than the coverage chosen by most people in the individual market. Their premiums would rise because ObamaCare would take away their right to choose a more economical policy.
Note also that the CBO predicts premiums would rise by an average of 10-13 percent in the individual market. Consumers who currently purchase the most economic policies would see larger premium increases.
Finally, the Obama plan would also force millions of uninsured Americans to purchase health insurance at premiums higher than current-law premium levels, which they have already rejected as being too high. Their premium expenditures would rise from $0 to thousands of dollars. Yet the CBO counts that implicit tax as reducing average premiums, because those consumers are generally healthier-than-average. Only in Washington is a tax counted as a savings.
You’re for Fair Competition, You Say?
Len Nichols is the top health-policy guy at the New America Foundation. He’s spent the past few months trying to negotiate a compromise between the Left and the far Left over the creation of a new government health insurance program that would compete with private insurers. With John Bertko, Nichols wrote a paper on how to create a level playing field between a government program and private insurance.
Yesterday’s CongressDailyAM, however, had an interesting article that sheds light on Nichols’ sense of fair play. According to the article:
Nichols has floated the idea of writing into law a requirement that certain changes to the system would require a two-thirds vote to pass rather than a simple majority.
Never mind that such a requirement would guarantee that the new program would breed even more stagnation and death than Medicare and Medicaid do.
What Nichols proposes is that a Democratic Congress should be able to create a new Fannie Med by a simple majority vote in each chamber, but if a subsequent (Republican?) Congress wanted to repeal it, they should face a higher bar.
Keep that in mind when you hear talk about a level playing field.
Len Nichols Is Wrong: This Debate Is about Socialized Medicine
Over at “The New Health Dialogue Blog,” my friend Len Nichols writes:
I am disappointed to hear the health reform conversation devolve once again into a contrived debate about a single payer, government-run health system. This is an old dispute about “socialized medicine” and one that has already been settled in the minds of a critical mass of policymakers.
A couple of things strike me about his post.
First, this debate is obviously about socialized medicine, and to argue anything else is absurd. We have a president who advocates single-payer. That president just held a health care summit to which he invited other single-payer advocates, but not a single free-market advocate. As I explain in this paper, all the bluster about “public-private partnerships” is an intellectually dishonest smokescreen. Nichols and other members of the Church of Universal Coverage hate the term “socialized medicine” not because it inaccurately describes their policies, but because it accurately describes their policies and rankles a large segment of the American public. Rather than adjust their policies, they are trying to convince the public that policies generally considered socialist really aren’t.
Second, this “old dispute” obviously has not been “settled in the minds of a critical mass of policymakers.” If that mass of opinion were truly critical, then (by definition) the fact that some are crying “socialized medicine” wouldn’t bother Nichols at all.
I think I’ll shoot my friend an email and invite him to speak at a Cato Institute policy forum where we can discuss whether President Obama is trying to move us closer to socialized medicine.
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